Supreme Court ruling a triumph for cable operators

Cable companies that offer broadband Internet access do not have to open their high-speed lines to competitors, owing to a U.S. Supreme Court ruling Monday that overturned a lower court decision and affirmed how the U.S. Federal Communications Commission (FCC) classifies cable-modem services.

Justices voted 6-3 to overturn the 9th U.S. Circuit Court of Appeals ruling in FCC v. Brand X, which is tied to complicated FCC policy regarding access regulations for telecom carriers and Internet service providers. The FCC ruled in March 2002 that cable-modem service is an "information" service not subject to the same regulation as telecom services. Incumbent regional telecom carriers, or regional Bells, are required to share parts of their networks with competitors at wholesale prices.

The FCC suggested at the time of its cable-modem ruling that less regulation would foster the growth of broadband and therefore the Internet. The incumbents, known collectively as the regional Bells, have argued that DSL and cable-modem service should have the same regulations related to Internet access that the FCC imposes on the telecoms.

ISPs, however, argue that cable companies should have to open their broadband Internet lines to foster competition. ISPs, including Brand X Internet and Earthlink, appealed the FCC cable-modem ruling. In October 2003, the ISPs won their case at the appellate level.

Telecommunication carriers predictably hailed Monday's decision, while Brand X said it should be a "wake up call to Congress on both procedural and policy grounds." Congress needs to be more explicit with the FCC about the procedures it wants the FCC to follow in making deregulatory decisions, the ISP said in a statement.

The FCC's exemption of cable-modem service from access regulations means that "the agency abandoned a fundamental principle that has applied to all means of communications throughout U.S. history: Communications and transportation networks must be available to all on a nondiscriminatory basis if they are to serve the public interest. This principle has historically applied to roads, canals, railroads, steamships, airlines, telegraph, and telecommunications," Brand X said.

Other critics of the Supreme Court ruling said that it will mean higher Internet access rates for users and slower broadband growth.

However, those who favored the ruling argued just the opposite. The ruling "is likely to spur additional investment in broadband infrastructure," and therefore adoption, networking equipment maker Nortel said in a statement that also contended that the Supreme Court decision had cleared away "regulatory uncertainties."

At least one FCC commissioner might be inclined to quibble with that assessment. "We really have our work cut out for us now," Commissioner Michael Copps, a Democrat, said in a statement. "In the wake of this decision, the FCC confronts the challenge of protecting consumers, maintaining universal service and ensuring public safety in uncertain legal terrain. Today's decision makes the climb much steeper."

But Commissioner Kathleen Abernathy, a Republican, said that the ruling allows the FCC flexibility "to craft a minimal regulatory environment that promotes investment and innovation in a competitive marketplace."

Justices Antonin Scalia, David Souter and Ruth Bader Ginsburg dissented from their Supreme Court colleagues' majority view.


Copyright © 2005 IDG Communications, Inc.

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